Health Insurance (Amendment) Bill 2017: Committee and Remaining Stages

Sections 1 to 6, inclusive, agreed to.

I move amendment No. 1:

In page 8, between lines 30 and 31, to insert the following:

"Monitoring of premiums

7. Following the commencement of this Act, the Health Insurance Authority shall monitor and report on the increase in premiums of private health insurance due to this legislation, to the Minister for Health, before the next amendment of the Principal Act with regard to Risk Equalisation Rates.".

We discuss this Bill every year. Last year the Minister for Health, Deputy Harris, said we need to encourage our insurance companies not to use this as an excuse to hike insurance premiums. The encouragement needs to be strengthened. That is why I have tabled this amendment to attempt to monitor premiums that are being helped from the public purse in respect of risk equalisation rates. It is necessary for this Bill to be passed but we need to be prudent and look after the public purse too and make sure there are no unintended consequences of this encouragement not to put up premiums. We need to have oversight of this and keep the insurance companies to their word; they can increase premiums but not so high that they will increase their profit.

Community rating is important in our two-tier system which has come under scrutiny lately. I hope the recommendations in the Sláintecare report will be enacted in the coming years to create a system based on need only and not on ability to pay. I ask the other parties to support this amendment. It shows that we are taking this seriously and holding private insurance companies to account because 46% of people in this country have private insurance policies whether they want to or not.

It ensures that we are on their side and that we are being prudent about the money that we spend, which is for the purpose of risk equalisation and nothing else. Go raibh maith agat.

I contend that the insurance companies are being held to account. This is about risk equalisation. The money is not coming from the Department of Health or from Government expenditure. Rather, it is being charged to the general public through their payments.

I agree with my colleague that insurance companies should not be allowed to use this as a reason to increase premiums. However, there is competition out there, and we must be careful that any legislation is not in breach of the competition rules of the European Union. It is true that we need to protect the public. However, over the last 12 to 18 months, the number of people who are taking out private health insurance has increased by over 150,000. It is important that we have competition in the market. At one point we had only one insurer in real terms, now we have a number of them. No matter what regulation one brings in, competition is the only way of keeping prices down. It is important that we encourage that.

I wish to pass on the apologies of the Minister for Health, Deputy Simon Harris, who cannot be here. I thank Senator Devine for the proposed amendment. The cost of private health insurance is influenced by a number of factors, such as the number of persons in the market, the age profile of those holding private health insurance and ongoing medical innovations. Each of these are contributors to the cost of care and the cost of claims, and therefore contribute to the cost of premiums payable. Health care usage is strongly linked with age. The ageing of the population has implications for health care policy generally and can directly impact health insurance premium prices.

This is why we have a risk equalisation scheme in the health insurance market, whereby credits are paid to all insurers to take account of the older and sicker members on their books. These credits are funded directly by stamp duty levies on all health insurance contracts. The scheme redistributes funds between insurers to meet some of the additional costs of insuring older and sicker members.

A crucial point is that all of the moneys collected from the stamp duties are transferred to a fund administered by the Health Insurance Authority and redistributed back to the health insurance companies by way of credits in respect of older and sicker people. None of the stamp duties on each health insurance contract goes to the Government. They are all redistributed to compensate for the additional cost of insuring older and less healthy people. Health insurers have often cited increases in stamp duty rates as being one of a number of different contributors to the cost of health insurance premiums. However, it is not the case that any increase or decrease to the rates of stamp duty automatically lead to an increase or decrease in the cost of health insurance premiums.

The other contributory factors to costs which I have mentioned are also taken into consideration in the commercial pricing decisions taken by each insurer when setting their product prices. I mentioned already that the total amount collected in stamp duty from insurers equals the total amount of credits paid to insurers. If the amount of stamp duty collected was higher than the credits paid then the scheme would be inflationary for the market. Conversely, if the stamp duty collected was lower than the credits paid, temporary funding would be required from the Exchequer. This is where the role and expertise of the Health Insurance Authority is particularly relevant. Taking into account market trends, each year the authority is able to accurately predict the total cost of credits and the stamp duty rates required to fund them.

As part of its evaluation and analysis of the market, the Health Insurance Authority already provides information on premium inflation in the market. The most recent information provided by the authority, for the 12-month period ending in June 2017, shows that the average gross premium paid by consumers was €1,188. This represents a 2% increase on the average premium paid in the 12 months prior to June 2016, when the figure was €1,164. Given that the Health Insurance Authority already has an ongoing role in the evaluation and analysis of market information including premium inflation, on behalf of the Minister I decline to accept the proposed amendment. We believe it is not necessary, and therefore we will reject it.

I support the amendment. One would almost need a PhD in mathematics to be able to make sense of the current health insurance market, because the plans are so complicated. I refer to the complexity of the differentials between the plans, the add-ons that are added on, the take-offs that are taken off, etc. What Senator Devine is putting forward is very much in favour of the consumer buying the insurance, because it is very difficult for anybody to compare plans and costs. Senator Devine is putting forward the case that if the equalisation fund is used in such a way as to make sure that there is balance, so that people who are older or at greater health risk are covered, that is fair enough. However, we do not want to see premiums sneaking upwards in a crafty way, by a small add-on here or there, to ensure that the credits are subsumed into the company's profits and it is the consumers who pay that little bit extra at the end of the day.

I understand what Senator Burke is calling for, namely, that we should leave it to the open market, but we have left it to the open market in many other areas. Some of the companies in the insurance area, in the car insurance market for example, are absolutely fleecing people when they can get away with it. We have seen that regulation is practically useless in that scenario, and no amount of Government finger-wagging or telling the insurers that this is bad and it should stop has actually alleviated the situation. We find a similar situation in health insurance for returning emigrants. I deal with a lot of spokespersons for the diaspora who tell me that one of their main barriers to coming home is the cost of health insurance. The irony is that some of these people are insured with the same company in a different jurisdiction, but when they come back here, their no-claims bonus or their track record with that company is not taken into consideration.

We believe that we cannot trust the companies or the market here. What we are trying to do is look after the patients in this scenario, or customers, as the companies see them, and make sure that it is a level playing-field. If the equalisation fund is being used in a proper manner, to make sure that people across the board can get health insurance, then we should put every safeguard in place to make sure that the companies cannot subsume those moneys into their own profit margins by some stealth method. Go raibh maith agat.

Amendment put and declared lost.
Question, "That section 7 stand part of the Bill", put and declared carried.
Title agreed to.
Bill reported without amendment, received for final consideration and passed.

When is it proposed to sit again?

Next Tuesday at 2.30 p.m.

The Seanad adjourned at 2.30 p.m. until 2.30 p.m. on Tuesday, 28 November 2017.